Customers braced for further energy price rises

Homeowners could face a fresh round of energy price rises after the UK's second biggest domestic energy supplier warned that it is likely to impose higher prices on customers before long.

Scottish & Southern Energy, which has 8.8 million UK customers, said it was becoming "more difficult by the day" to resist raising prices despite the price of oil falling from $147 to around $125 a barrel in recent days.

Chief executive Ian Marchant said it was becoming increasing difficult to keep retail energy prices down, as wholesale prices soar. "The extent of the energy shock with which the entire global economy is having to contend has been well-documented, and its full impact on prices for electricity and gas in the UK has still to be felt," he said.

"We are continuing to resist the pressure to put up prices for domestic customers, but doing so is becoming more difficult by the day."

SSE's warning is the latest sign that households having to cope with soaring food and fuel prices should also brace themselves for higher energy bills.

A surge in wholesale gas costs has already prompted a raft of higher tariffs from the "big six" UK energy firms in January - prompting a probe by energy regulator Ofgem - although SSE held off until March to lift its own prices.

Analysis for the Daily Telegraph suggests that inflation for middle-class households was running at 7.4 per cent during June - double the official rate of inflation - causing a sharp decline in living standards.

This is because middle class families spend proportionately more of their income on fresh food, fuel and energy bills than other groups.

Last week Centrica, the parent company of British Gas, published an independent report predicting that gas bills could increase by 70 per cent to take them from £650 to £1,100 or more "over the next few years".

Energy bills have already risen by 15 per cent this year and consumers will have to get used to permanently high prices, the analysis, written by Eclipse, a group of Norwegian energy experts, said.

It warns that Britain faces an acute shortage of cheap energy because domestic gas production is falling and we rely increasingly on imports from Europe and Asia, where the price is closely linked to oil prices.

Scottish and Southern, which has gained 350,000 customers over the past year, said it was continuing to invest in "airtricity", or wind farms, as an alternative form of energy based on joint European ventures and a proposed site near Glasgow.

The firm has told investors that profits in the six months to September 30 would be "substantially lower" than in previous years but said the majority of its profits would be made between October and March - a clear signal that price increases are on the way.